Packard Bell to cut 400 jobs

Packard Bell NEC will lay off approximately 400 employees as it consolidates all of its U.S. operations into its Sacramento, California, facilities.

Under the cost-cutting move, Packard Bell will close notebook manufacturing facilities in Fife, Washington, and sales offices in Massachusetts and move them to California. The relocation will mean eliminating approximately 400 positions.

The consolidation will be complete by the end of 1998, the company said.

"We will see improved efficiency and productivity with this next step in our planned corporate integration," said Beny Alagem, Packard Bell's CEO, in a prepared statement.

The layoffs come as the company continues preparing for an IPO that could take place as early as this year, according to various sources.

Packard Bell has seen its market share slip in the past year as larger manufacturers such as Compaq Computer have increased their focus on consumer computing. During the first quarter of 1998, unit shipments from Packard Bell dropped 10 percent from the same period the year before, causing a market share decline to 7.9 percent, according to International Data Corporation.

The company also commenced a direct sales effort in 1997, which caused a dip in sales. Sales also declined in 1997 from 1996 figures, IDC added.

In April, Packard Bell sent 600 workers home without pay for a week each to cut costs.

"Packard Bell is continuing to struggle," said Kevin Hause, an analyst at IDC, at the time. "They're still working out the operational kinks with NEC Now [the direct sales program], which is not doing as well as they would
have hoped."

Meanwhile, Japanese conglomerate NEC, the largest investor in the company, has been putting pressure on Packard Bell to generate profits, sources said. Packard Bell has not been profitable since NEC's initial investments in 1996, sources added. NEC invested an additional $300 million into the company in December, bringing its stake up to 49 percent.